It’s a ruling that could shake apart a billion dollar foundation in the sports business. On Sunday, the National Labor Relations Board allowed Northwestern University football players to unionize, in what many are calling the latest threat to the model of not paying athletes in college sports. If student-players are financially compensated, they might require sponsorships from colleges higher than what the institutions already spend on their programs.
Last year at Texas A&M, quarterback and Heisman Trophy winner Johnny Manziel was caught selling his autograph. Manziel was suspended for half a game at a season opener as penalty. Manziel had violated the NCAA bylaw that states student-athletes cannot use their names for commercial purposes, or accept payment from their own likeness.
Public opinion was widely on Manziel’s side, many arguing the hypocrisy of the NCAA’s rules. Some are questioning why players can make billions for the association and the colleges they play for while make nothing themselves. It was the beginning of a revolution.
Moody’s financial specialists, led by Moody’s CEO Raymond McDaniel, have offered their two cents on the issue. Dennis Gephardt, a top analyst at the firm has said that a change in the practice “would ultimately precipitate a major retooling of college sports programs, which are often critical to the identity of universities and help with student recruitment and donor support.”
In June 2013, the credit firm changed the position of the NCAA debt to negative because of rising risks. The NCAA is facing separate lawsuits challenging its authority and faces the potential of higher costs from legal judgments and settlements, regulations or new policies, Moody’s said.
What do you think? Should student athletes be compensated? Or should the scholarships, experiences, and education they receive while in college be compensation enough?